Waxman tells banks to justify bonuses

Congressional investigators demanded State Street Corp., Citigroup Inc., and seven other banks justify billions of dollars in pay and bonuses after they accepted $125 billion as part of a taxpayer-funded bailout.

In letters to the nine firms yesterday, Representative Henry Waxman, the chairman of the House Committee on Oversight and Government Reform, said they collectively will pay $108 billion in employee compensation and bonuses in the first nine months of 2008, almost the same amount as last year.

"I question the appropriateness of depleting the capital that taxpayers just injected into the banks through the payment of billions of dollars in bonuses, especially after one of the financial industry's worst years on record," Waxman wrote.

"We look forward to cooperating with chairman Waxman's request," said Michael DuVally, a spokesman for Goldman Sachs. Spokesmen for the other firms declined to comment or didn't immediately reply to requests for comment.

Waxman, a California Democrat, asked the nine banks to divulge total company compensation, average compensation for each employee, and the reasons for any year-to-year changes in the amounts for 2006, 2007 and 2008.

Waxman also asked for the number of employees paid or projected to be paid more than $500,000, and the total and projected compensation for the banks' 10 highest-paid employees.

Also yesterday, an impatient White House served notice on banks receiving billions of dollars in federal help to start making more loans. "What we're trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money," White House press secretary Dana Perino said.